RACHEL MADDOW, MSNBC: That does it for us tonight, we will see you again tomorrow, now it`s time for THE LAST WORD with Lawrence O`Donnell, good evening, Lawrence.

LAWRENCE O`DONNELL, HOST, THE LAST WORD: Good evening Rachel, and the mayor is really the one from what I`ve been hearing from Puerto Rico who is really delivering the message about what`s really needed.

We`re going hear more of what she had to say later in our hour, but I`m so glad that you have highlighted it as much as you have.

MADDOW: You know, she`s been there on the – really on the ground. We`ve been watching, you know, news footage from the last few days about her in waders, you know, her in –

O`DONNELL: Yes –

MADDOW: Boats going door-to-door talking to people directly. She is out there in the middle of it and I think that is fueling her rage and upset, and I hope people in Washington can hear.

O`DONNELL: And she finds her eloquence within that –

MADDOW: Yes –

O`DONNELL: Every time I hear her speak about this. We`re going to hear more from her later in this hour. Rachel –

MADDOW: Thanks, Lawrence –

O`DONNELL: Thank you very much.

MADDOW: Appreciate it –

O`DONNELL: Thank you. Well, in the first battle – in the first battle of what may become the war between Steve Bannon and Donald Trump, Steve Bannon has won decisively.

Steve Bannon`s candidate has just beaten Donald Trump`s candidate in the Alabama Senate race. Steve Kornacki joins us now with the Alabama results. Steve, what happened?

STEVE KORNACKI, MSNBC: Yes, well, I mean, there it is. Steve Bannon and that sort of anti-establishment wing of the Republican Party, Roy Moore was their candidate in this race.

This is about three-quarters of the vote in. This race has been called, Roy Moore wins this Republican runoff for the United States Senate against the candidate that Donald Trump endorsed.

The candidate – Donald Trump was in Alabama last Friday on stage with this candidate saying hey, Republicans, I need this guy in the Senate.

Well, Donald Trump`s candidate Luther Strange, he`s come up short decisively in this thing, as you say. Look, one thing down the stretch that Roy Moore and his campaign capitalized on, wasn`t just that Bannon and a lot of these Trump supporters from the beginning were behind Moore, certainly that helped them with the Republican base.

But Donald Trump himself, when he was campaigning for Luther Strange last Friday, he is on the stage, Strange is about 10 feet away, and he muses to the crowd, talking about endorsing Strange, he said maybe I made a mistake here.

O`DONNELL: Yes –

KORNACKI: And that became a last-minute ad that the Moore campaign ran. I think a devastating one because it sounded to Trump`s base potentially like Trump was kind of winking at them and saying you know what, guys, I got to do this, but I really want you to be on the other side of this thing.

And so there you go, Roy Moore, this is one Democrats – I think Democrats are going the take a look at this race in December, that`s the general election and we`ll see what happens.

O`DONNELL: Steve, what does this tell Washington about the value of a Donald Trump endorsement?

KORNACKI: Well, look, Donald Trump, what we learned from this is trying to sell in an establishment candidate. And I think that`s what Luther Strange functioned as here in this Republican primary.

Donald Trump going in and trying to sell the base – his base on the establishment, Donald Trump can`t make that sale.

This is the candidate, Roy Moore is the candidate that the base wants. And by the way, there`s this news out of Tennessee – so quickly say, there is this news out of Tennessee today that Bob Corker; the Republican senator from there is not going to run in 2018.

A lot of talk right now that this result tonight, this expected result is one of the factors maybe in that decision on his part.

He sees this happening and the Republican base does not want the deal with that himself potentially in 2018.

O`DONNELL: Thank you, Steve, really appreciate it.

KORNACKI: Sure.

O`DONNELL: Thank you. Well, now that Steve Bannon is out of the White House, he seems to be on a revenge mission to make life miserable for everyone left in that White House, and very much including tonight Donald Trump.

Here is Steve Bannon. Here is how he campaigned in Alabama yesterday against Donald Trump`s candidate for Senate.

(BEGIN VIDEO CLIP)

STEVE BANNON, FORMER WHITE HOUSE CHIEF STRATEGIST: Mitch McConnell in this permanent political class is the most corrupt and incompetent group of individuals in this country.

They think you`re a pack of morons, they think you`re nothing but rubes. And tomorrow, you`re going to get an opportunity to tell them what you think of the elites that run this country.

(CHEERS)

(END VIDEO CLIP)

O`DONNELL: And there is the monster that Donald Trump created. And tonight, Steve Bannon`s candidate has won.

Steve Bannon`s winning candidate for the seat is of course the former state Supreme Court Justice who was suspended twice from that job.

Once for installing a monument to the ten commandments at the courthouse, and the second time for refusing to comply with a ruling of the United States Supreme Court.

And he`s – there is Judge Moore up there tonight, accepting the victory that he has earned there in Alabama.

BANNON: They tried to destroy Donald Trump. The same – the same gang that is going after Roy Moore is the same gang that went after Donald Trump.

And I`ve got to tell you, I think it`s some time later after tomorrow, a real – you know, review has to be done of how President Trump got the wrong information and came down on the wrong side of the football here.

(END VIDEO CLIP)

O`DONNELL: And we`re joined now by Mike Murphy; political media consultant for the Republican Party.

Also joining us is Jason Johnson; politics editor at the Root.Com and Msnbc contributor Ron Klain; former senior aide to President Obama, chief of staff to Vice Presidents Biden and Gore.

And Mike Murphy –

MIKE MURPHY, POLITICAL MEDIA CONSULTANT, REPUBLICAN PARTY: Yes sir –

O`DONNELL: I know you`ve been hoping to live a long life. But I do not think you ever expected you would live long enough to see the drama or whatever you want to call this thing that has just played out in Alabama, Steve Bannon versus Donald Trump.

And convincing – trying to convince voters in Alabama that Donald Trump`s judgment cannot be trusted. And the way to help Donald Trump is to vote for the Bannon candidate.

MURPHY: Yes, cats chasing dogs. We`re going into Shakespearean bizarro land here. And I think now it will be – it will least be amusing to people who like the theater of politics because Trump will not be able to stand being beaten by his own mastermind.

You know, the minute Bannon became famous, his days were over in the White House. So now, I think the – what will happen is one, we`re going to have – Bannon will get drunk on this and go out predict a lot more Republican primaries, and he`ll be able to recruit some candidates.

Now, the problem is Alabama, I`ve worked there. I actually did Sessions` first race. It`s very special.

And so I don`t know if this formula will repeat but at least more primaries will lay up. And I think Bannon on Trump violence will dramatically increase and Republican candidates are going to have to have a challenge because this guy Moore makes Todd Akin look like Nelson Rockefeller.

They`re going to be asked about him and his crazy positions. They`re going to have to distance themselves a bit.

It`s going to be interesting if Trump will endorse and get behind this guy. He`ll want to get credit for his likely, but not certain win.

But then Trump will be tarnished by some of these positions. Then it`s kind of hard to tarnish the president with some of the things he`s done.

O`DONNELL: Well –

MURPHY: So this is going to be – this is going to be complicated.

O`DONNELL: Yes, and of course, Mike, Donald Trump, when he was campaigning for his candidate promised that he would immediately endorse –

MURPHY: Right –

O`DONNELL: And work for the other guy if the other guy won, as he just did. And I want to go to that video that Steve Kornacki was talking about where Donald Trump actually said in – “while he`s up there on the stage with his candidate endorsing him, I may have made a mistake.”

And the Moore campaign was able turn that into a commercial. Let`s just watch the way Trump said that.

(BEGIN VIDEO CLIP)

TRUMP: And I might have made a mistake, and I`ll be honest. I might have made a mistake. If Luther doesn`t win, they`re not going to say we picked up 25 points in a very short period of time.

They`re going to say Donald Trump, the president of the United States was unable to pull his candidate across the line.

It is a terrible moment for Trump. This is total embarrassment.

(END VIDEO CLIP)

O`DONNELL: And Jason, Donald Trump has just tweeted his congratulations to Roy Moore.

JASON JOHNSON, POLITICS EDITOR, ROOT.COM: I`m not surprised. This reminds me of what he said about Mike Pence.

You know, he wasn`t happy about Mike Pence either and he basically –

O`DONNELL: Right –

JOHNSON: Said, look, if I could have had Bobby Knight, I would have taken him.

O`DONNELL: Right –

JOHNSON: But I think the important thing to remember here, for every Republican who is running in 2018 in the Senate, you have to remember, number one, Donald Trump is not a trustworthy surrogate.

You don`t know what he is going to say when he gets on stage. And two, look, Steve Bannon was one of the keys to Trump getting elected.

He`s Liam Neeson, he has a special set of skills of being able to sort of rationalize and make this sort of white nationalist populism sound decent to people.

And if he can sell this outside of Alabama, there is a lot of Republicans across the country who will be worried going into 2018.

O`DONNELL: And Ron, what do the Democrats see when they look at this tonight?

RON KLAIN, FORMER CHIEF OF STAFF TO JOE BIDEN & AL GORE: Well, they see that Senator Strange was beaten by a candidate even stranger.

I mean, you know, the most extreme Republican possibly got nominated. And it shows a lot of opportunity for Democrats.

Now, Alabama Doug Jones still a long shot, but has a shot against Judge Roy Moore. We saw because of what`s going on in Alabama, Senator Corker, a shoo-in for re-election in Tennessee stepped down, and now that`s an open seat.

And in Florida tonight, for is seventh time, a state legislative seat slipped from D – from R to D. We picked up a seat in a special election in Florida.

So I think Democrats are seeing that the division in the Republican Party is creating a lot of opportunities.

O`DONNELL: We`re going to bring you whatever Roy Moore has to say. He`s been doing a lot of thanks to people, and well let`s do – we`ll dip into it for a few seconds just to get a flavor of what he has to say.

ROY MOORE, FORMER CHIEF JUSTICE: Or that goodness, the sovereign source of our law, liberty and government which is Almighty God. We have become a nation that has distanced ourselves from the very foundation.

Washington said of all the dispositions and habits which lead to political prosperity, religion and morality are indispensable supports.

We`ve got to recognize that we`ve been separated by something that separates the church the state doesn`t stand for.

It doesn`t separate us from God. Nothing can separate us from God. We are one nation under God, and we can become one nation unified.

There is so much division in our society. Protests, demonstrations, mobs, racial strife, but we`re all created in the image of God.

I recall what Harry Truman said in his inaugural address. “The American people stand firm in the faith which has inspired this nation from the beginning.

We believe that all people are created in the image of God, and from that faith, we will not be moved. We`ve been moved.

O`DONNELL: OK, we`re going to come back into the studio for this conversation. What I`ve been told by the control room is that he has been speaking about God and about God almost exclusively with I think so far no real reference to his opponent or Donald Trump.

Roy Moore – Mike Murphy, Roy Moore has said that homosexual conduct should be illegal. He said that just a few years ago.

It`s the kind of thing that he is very likely to say publicly and possibly on the Senate floor if he makes it to the Senate.

How will that be helpful to the Republicans as a party generally to have someone there in the Senate who they may be some of them anyway, forced to disown from time to time?

MURPHY: Well, if he gets to the Senate, and I would say he is strongly favored but not certain in the general election. I think the Democrats will rename the democratic national building the Roy Moore center for the boatloads of cash they`re going to raise because of the inflammatory things he apparently likes to say and will probably keep saying.

So he`ll become a political embarrassment to a lot of Republicans, particularly from purple swing states. I think people will walk away from him, and he`ll be isolated.

I think the shorter term thing is how many primaries will he inspire? And will any of them gain real traction and put some incumbents in trouble.

It`s right that Bob Corker was probably thinking about that equation when he made his decision not run. Not sure drove it, but I`m sure it was a factor.

O`DONNELL: Yes, and Jason, just on the Corker point. He did say when he first ran for Senate, he thought two terms would be about right.

JOHNSON: Right –

O`DONNELL: And two terms is what he is doing. So we don`t know for sure whether this is what it is. But the Senate is a profoundly depressing place to work now –

JOHNSON: Right –

O`DONNELL: In both bodies, but more so for the Republicans because they finally have a Republican president and he is functionally in legislative terms, out of his mind.

JOHNSON: Right.

O`DONNELL: And they can do – they can get nothing done because he is so destructive to what they`re trying to do.

JOHNSON: He is destructive to them symbolically, he is destructive to them practically. But I`m just – I`m not even going out on a limb here.

I think Bob Corker is stepping down because he is going to check the wind, he`s going to check what`s going on after 2018, and I think he might primary the president.

O`DONNELL: That –

JOHNSON: I think that`s what this is about.

O`DONNELL: Yes, Ron, I mean, if you`re looking for what would Bob Corker`s political motivation be for getting out of there, separate and apart from what I was talking about the absolute horror of the job now in the Senate.

My – I think Jason`s got a nicer bet there than he is afraid of a challenge.

KLAIN: Well, I think probably there is truth in all these things –

O`DONNELL: Yes –

KLAIN: And you know, and it does make sense to set himself up as a potential opponent to President Trump.

But you know, more broadly, Lawrence, what you`re really seeing is the consequence of the unraveling of the Republican Party.

You`ve got today the president`s principle legislative initiative getting rid of the Affordable Care Act, going down and his people saying that Mitch McConnell is to blame.

And you know, obviously you saw that in Alabama, them trying to – Judge Moore ran very hard against Senator McConnell.

And so it`s going to be very hard to get anything done in the Senate if the president is attacking and his people are attacking and candidates are attacking and the Republican Party are attacking the Senate Republican leader.

And as a result, he is nine months into his presidency and doesn`t have a single legislative achievement. So no surprise the Republican senator is retiring, maybe to run against him, maybe just to get out of it.

Certainly because he does not want to stand on the stump and have Donald Trump be campaigning for him in 2018, that`s for sure.

O`DONNELL: Mike, as our experienced Republican veteran of presidential politics, what does it look like tonight for the, quote, “reasonable man Republican Bob Corker challenging this president for the Republican nomination?

MURPHY: Well, I think there may be a lot of people challenging him. I think he`ll be a one-term president because I think, and this breaks my heart as a Republican and would like to see our policy agenda get enacted.

But we could have really rough mid terms. You know, you look at some of these state legislative races, and I think, Ron alluded – one in Florida there was an interesting, they`re a tiny districts but interesting one up in New Hampshire and Rockingham County.

The professionals in the Republican Party are looking around, seeing our canaries and the coal mine are all choking.

So we`re looking at what could be a very rough midterm, and if we have a rough mid-term, then I think the party is going to turn on Donald Trump because his brand has been winning.

Well, we`re not winning, and he is not ideologically connected. He is not really a Republican, he is a populist.

So all those things could create the perfect storm. And I think there could be a long list of people who would look at primarying him if he even runs again.

I – my crazy prediction is, he`ll start talking about creating his own third party, populist party to run and kind of play that big card rather than face a Republican Party that may really have turned on him after a dismal 2018.

Hope I`m wrong. I`d like to hold the Senate which I think we will and pick up seats and hold the House. But we could be in for a tough midterm here, and he is a big cause of it.

O`DONNELL: Mike Murphy and Ron Klain, thank you both for joining us tonight, really appreciate it.

MURPHY: Thank you.

O`DONNELL: Coming up, Republicans have lost another fight to repeal and replace Obamacare. The promise that they just can`t keep.

One of the Democratic senators who was in that Finance Committee hearing yesterday where there were almost 200 arrests, something that committee has never seen before will join us.

(COMMERCIAL BREAK)

O`DONNELL: It was another huge win for the resistance today in the United States Senate.

(BEGIN VIDEO CLIP)

SEN. MITCH MCCONNELL (R-KY), MAJORITY LEADER, SENATE: We haven`t given up on changing the American health care system.

(END VIDEO CLIP)

O`DONNELL: The Republican Senate leader Mitch McConnell was forced to publicly surrender on the Senate`s latest attempt to fulfill the impossible Trump campaign promise of repealing and replacing Obamacare the day after the Senate Finance Committee was overwhelmed by the resistance.

(BEGIN VIDEO CLIP)

(CHANTING)

(END VIDEO CLIP)

O`DONNELL: Hundred and eighty one members of the resistance were arrested at the Senate Finance Committee yesterday, we`ll be joined in a moment by a member of the committee who witnessed that history-making event.

Today, the president said he doesn`t know why three Republican senators announced they would vote against the bill which was enough to kill it, those three votes.

The president just doesn`t know why they did that. And that is the single most convincing thing that Donald Trump has ever said about the hapless Republican repeal and replace crusade.

Of course, Donald Trump doesn`t know why those Republican senators are against the bill. Donald Trump doesn`t know what`s in the bill.

There is not one member of the Senate or the House, not a single Republican who believes that Donald Trump has read or comprehends a single sentence of any of the healthcare bills including the Graham-Cassidy bill.

(BEGIN VIDEO CLIP)

DONALD TRUMP, PRESIDENT OF THE UNITED STATES: We were very disappointed by a couple of senators, Republican senators, I must say.

We were very disappointed that they would take the attitude that they did. We don`t know why they did it. You can sort of figure that.

But we`ll see what happens. I mean, you know, it`s going along, and at some point there will be a repeal and replace.

But we`ll see whether or not that point is now or will it be shortly thereafter. But we are disappointed at certain so-called Republicans.

(END VIDEO CLIP)

O`DONNELL: The so-called Republicans include life-long Republican John McCain, life-long Republican Susan Collins, and life-long member of the Paul family Rand Paul.

Donald Trump has been a Democrat, an independent, and a Republican, and he is the elected official in Washington who most viciously and consistently and personally attacks Republicans.

And now that Donald Trump has proven himself once again to be the president who cannot get anything on his campaign agenda through Congress, he will have to blame someone.

And because he knows absolutely nothing about the politics of governing, he will blame the wrong person. He will not blame Chuck Schumer for running a flawlessly disciplined and unified Democratic Party resistance to the Senate bill.

A resistance that only needed to add three Republicans to kill the bill because Chuck Schumer kept every Democrat, including Democrats from states won by Donald Trump totally unified in their opposition.

And even more surprisingly, Donald Trump has yet to blame Jimmy Kimmel for joining the resistance to the bill last week by devoting several minutes of his show every night to a detailed description of the bill that Donald Trump could never give.

He could never give a description like that. And it was a description that Donald Trump could probably not understand, even when laid out so simply and clearly and powerfully by Jimmy Kimmel.

(BEGIN VIDEO CLIP)

JIMMY KIMMEL, COMEDIAN & TELEVISION HOST: Oh, I get it, I don`t understand because I`m a talk show host, right?

I don`t want to turn this into a Kanye and Taylor Swift type situation.

(LAUGHTER)

But when Senator Cassidy was on my show in May, he told me that he believed that every American family, regardless of income should be able to get quality health care, and I believed he was sincere.

Sadly, the bill he unveiled last week with Senator Lindsey Graham indicates that he was not sincere. It is by many accounts the worst health care bill yet.

(END VIDEO CLIP)

O`DONNELL: Now what`s so surprising about Donald Trump`s apparent fear of taking on Jimmy Kimmel is that he has always relished a show business battle in which he nonsensically attacks someone in show business who has said something about him or who he thinks has said something about him.

Remember his attack on Meryl Streep for what she said at the Golden Globes without even mentioning his name?

(BEGIN VIDEO CLIP)

MERYL STREEP, ACTRESS: When the person asking to sit in the most respected seat in our country imitated a disabled reporter, someone he outranked in privilege, power and the capacity to fight back.

It kind of broke my heart when I saw it. And I still can`t get it out of my head because it wasn`t in a movie. It was real life.

(END VIDEO CLIP)

O`DONNELL: Trump could not attack what Meryl Streep said because every word she said was true. And so he tweeted, “Meryl Streep, one of the most overrated actresses in Hollywood.”

That was his tweet, that was his attack. So where is the tweet about how unfunny Jimmy Kimmel is? Where is the tweet about how stupid Jimmy Kimmel is?

Why isn`t Trump blaming Jimmy Kimmel along with John McCain and Susan Collins? Jimmy Kimmel came out against this bill before those senators did.

The “Daily Beast” says “Donald Trump has someone else to blame.” One senior Trump administration official told the “Daily Beast” that the president is well prepared to shovel blame on to McConnell.

Mitch McConnell has known from the start that he was being asked to do the impossible. And by the start, I mean, the 2012 election campaign, when Republicans started campaigning on repeal and replace.

McConnell has always known that they could win seats by saying stuff like that, but they would never actually be able to do it.

McConnell knew that the inauguration of a Republican president this year meant that he would be asked to be the first majority leader in Senate history to lead a legislative crusade to take health care away from people, tens of millions of people.

And when Mitch McConnell saw how weak the support for the repeal and replace was in the House this year, he knew it would be impossible in the Senate because it`s always easier to pass a bill in the House than in the Senate.

It is remarkable that Mitch McConnell got 49 Republican senators to vote to take health care away from 20 million people in what was a losing vote in July.

That vote can be used against every one of those senators for the rest of their careers, and it got them nothing.

It was a losing vote. It is remarkable that Mitch McConnell was able to get that many votes for a bill that is supported by 20 percent of the public.

A bill that is political suicide. Mitch McConnell is not Donald Trump`s problem on this. Donald Trump is Donald Trump`s problem on this.

And now Donald Trump is – and Mitch McConnell are both each other`s problem. A problem that they both so well deserve.

And their dysfunctional relationship is the very best thing that could possibly happen to the Senate Democrats` resistance to the Trump agenda.

Joining us now is Democratic Senator Maria Cantwell from Washington tonight, she is a member of the Senate Finance Committee.

And Senator Cantwell, you saw something in that committee hearing room yesterday that that committee has never seen before.

I think you might have had one or two arrests of individual voice of protest here and there in the last few years.

But tell us about what it was like to be in that room with that resistance rising against that bill and the – and watching the arrests that followed.

SEN. MARIA CANTWELL (D), WASHINGTON: Well, good evening, Lawrence. And it was a moment. I mentioned to my colleague, even though we`ve been there at the passage of the Affordable Care Act, I wasn`t so sure that wasn`t the most dramatic moment of the history of this legislation.

Because it was so emblematic of what I hear in my state, and I think of what a lot of my colleagues hear which is the fear and anxiety that Americans have that they might lose their health care.

So when they kept shouting about their liberty, they meant their access to health care, to live in a country where they can have access to health care.

And so the resolve of these individuals was amazing. The fight and spirit that they showed was amazing.

I do want to thank – I know it was a very hard duty for our Capitol Hill police. But these individuals were there.

And were dedicated to this cause of speaking out in the most compelling way about do not take our health care away from us.

And they were speaking for millions and millions of Americans who feel like their voice isn`t being heard on this.

O`DONNELL: And senator, you`ve been in the meetings with the Democrats on the Finance Committee and with all the Democrats in the Senate.

How difficult has it been for the Democrats in states where Donald – that Donald Trump won to stay with the party on this position?

CANTWELL: Well, I think we`ve tried to talk about, you know, principles. The president had tweeted during his campaign that he was not for cutting Medicare, Social Security or Medicaid.

So it`s – I think to a lot of our colleagues, the surprise that they come up with a plan, particularly as the issue is really the individual market.

So how do you stabilize the individual market? It`s almost like they`re proposing a hat-trick – oh, well, let`s go over here and destabilize the Medicaid market.

And so – I think to our colleagues, whether – no matter what state you represent, the notion that you`ve had stable health care in the Medicaid market was no reason to support this legislation because it is literally a cut to that program.

O`DONNELL: And they all had – they all came from states, saw all 50-state Medicaid directors opposed it.

They at least had that going for them. I want you to listen for a moment to what the mayor of San Juan had to say tonight.

I want to discuss the situation in Puerto Rico with you before we go. Let`s listen to this.

(BEGIN VIDEO CLIP)

MAYOR CARMEN YULIN CRUZ, SAN JUAN, PUERTO RICO: My wish is that we focus on the issue at hand.

And the issue at hand is that we get lives, and how do we get the things needed to save the lives into the hands of the people?

Let`s not put any other topic on the table. There shouldn`t be any other dialogue, but let me tell you this.

The people are here and the debt is here. The people before the debt, let`s not talk about the debt and let`s talk about the possible deaths.

That is what we need to be concerned about right now.

(END VIDEO CLIP)

O`DONNELL: Senator, your reaction to that.

CANTWELL: Well, I couldn`t hear every word that she was saying, I think just because of here in the earpiece that I`m using.

But I can tell you this. We need a more aggressive response. We need the U.S. – Abraham Lincoln, which I believe is in the area to be deployed and be there as an anchor in providing support and supplies and structure to that crisis.

We need to have a Whitehouse level coordinator, all federal agencies to respond to this crisis. We need to prioritize the humanitarian assistance.

I know we have FEMA there on the ground. I know we have declared some of but not all of the island as a federal emergency. But this is without food, without water, without health care or the ability to store insulin and things of that nature, have a much bigger crisis than we`ve probably ever seen even in any part of the United States. And so we need a more aggressive response.

LAWRENCE O`DONNELL, MSNBC ANCHOR: And Senator, as we know, the Puerto Rican economy was in crisis mode before this. And it has struggled mightily for decades now but certainly, when the Senate Repealed Tax Provisions that favored businesses locating in Puerto Rico, that hurt unemployment even more. Is there anything that you might consider reestablishing by way of tax incentives to help the economy of Puerto Rico, especially in the possible upcoming Senate Tax Bill that the Republicans are going to be moving?

CANTWELL: Well, I`d tell you, Lawrence, you and I could have a whole show about Puerto Rico and what`s transpired on the proposals that have been passed to restructure Puerto Rico and whose interests got served. But I would tell you this right now. What we need to do as the United States Senate is makes sure that Puerto Rico has the health care resources to take care of this population.

They would have already be seeing a rollback of what was under the Affordable Care Act provisions that helped stabilize on the Medicaid rate for Puerto Rico. That would have been falling off normally, and is something that the finance committee and I think my colleagues on the Republican side of the aisle had agreed that they should be helping Puerto Rico on before this crisis. But now that we`re in this level of crisis, we need to make sure the resources for the health care system are there for Puerto Rico.

O`DONNELL: Senator Maria Cantwell, thank you very much for joining us tonight, really appreciate it.

CANTWELL: Thank you.

O`DONNELL: Coming up, what President Trump said today about the NFL protests. Because, you know, we had a press conference with the Prime Minister of Spain. So of course he is talking about the NFL

(COMMERCIAL BREAK)

O`DONNELL: Here is the president of the United States today in a Rose Garden Press Conference with the Prime Minister of Spain.

(BEGIN VIDEO CLIP)

DONALD TRUMP, PRESIDENT OF UNITED STATES: They were fighting for our flag. They were fighting for our national anthem. And for people to disrespect that by kneeling during the playing of our national anthem I think is disgraceful.

(END VIDEO CLIP)

O`DONNELL: Of course the United States of America has never gone to war over the flag or the national anthem. This country did not even have a national anthem until long after World War I. We`ve been here before, a president trying to score political points with the flag instead of the quality of his governance, a Republican President. After the Supreme Court ruled that flag burning was protected by the First Amendment, President George H.W. Bush led Washington Republicans in an attempt to amend the constitution to protect the flag with the President saying that the flag was just too sacred to be exposed to the first amendment.

Republicans knew that the amendment could not win the necessary 2/3 vote in the House and Senate. But Washington Republicans were hoping to draw enough Democrats into what they would then characterize as the defense of flag burning. Nebraska Democrat Bob Kerrey rose in opposition to that amendment in the senate when he spoke; everyone knew that they were listening to a former Navy S.E.A.L. who last lost half of his right leg in Vietnam. And had been given the Medal of Honor by Republican President Richard Nixon during the war.

(BEGIN VIDEO CLIP)

BOB KERREY, NEBRASKA DEMOCRAT: To take the American flag and use it, not just to perhaps win the majority in the senate. not just perhaps to win a few elections in November. That`s the least of what they`ll accomplish. The greatest victory, the greatest victory, if you can call it a victory, is the Republican President, the leader of the United States of America at a time when we`ve got a great opportunity to use this moment in history, when peace is breaking out all over.

He will divide the nation again. That`s what he is doing. Not rallying Americans to respect the flag. Not rallying Americans to respect freedom, but by using it as a political issue to divide America in which he gains a marginal political advantage and loses a great deal as well.

(END VIDEO CLIP)

O`DONNELL: We`re joined now by Richard Allen Smith, contributor for Esquire who is also an Afghanistan war veteran. Back with us Jason Johnson and Richard, the words Bob Kerrey was using about this kind of use of the flag for divisiveness, political divisiveness, you could take some of those lines and they sound perfectly appropriate to what we`re watching today.

RICHARD ALLEN SMITH, MSNBC CONTRIBUTOR: They absolutely do. That`s exactly what Trump is trying to do. These players protest is not about the flag. It`s not about the anthem. It`s about Anthony Lamar Smith who was killed by a St. Louis Police Officer who said we`re going to kill this guy before he then killed this guy.

And just this month was acquitted in his trial. It`s about Tamir Rice. It`s about Mike Brown. It`s the repeated incidents of black people being murdered by law enforcement in America with impunity. And I`m glad they`re doing it.

O`DONNELL: Richard, as an Afghanistan veteran, what is your reaction to what the President says when he says they fought for our flag. They fought for our national anthem.

SMITH: I didn`t fight for any flag or anthem. I don`t know anybody who did fight for a flag or anthem. The guys I went to war, they fought for the guys to their left and right. Not for any piece of cloth. That`s what I think what Trump said. He said he is ashamed today. This is a man who has no capacity for shame.

He`s a serial sexual predator and a bigot. He has made his career about devaluing the lives of black and brown people going back to central park five. This is absolutely ridiculous. This has no impact on anybody that has ever served that I know. And I`m just ashamed this is our President and this is the kind of thing he spends his time talking about.

O`DONNELL: Jason, there he is in the Rose Garden with foreign leader. And he can`t get himself away from the flag and the national anthem.

JASON JOHNSON, MSNBC CONTRIBUTOR: I mean first and foremost, he didn`t know the difference between a President and a Prime Minister as he tweeted out he didn`t have the name right. But, you know, it`s just the focus of his Presidency, right? You don`t want to focus on health care.

You don`t want to focus on Puerto Rico. You want to focus on people you think you can beat up on. And that`s been one of the big issue here is. Donald Trump thinks hey, I can get a victory. I can talk about entitled black athletes who make too much money. He thinks that`s going to be successful for him.

The problem is there is an extent to which you can run outrage and then it runs out. How angry are people are going to be? They`re going to keep watching football. They`re going to keep watching Cam Newton and Russell Wilson and Tom Brady.

So this is a losing proposition for him. And he can keep beating that same racist drum. It`s not going to change the reality of his failed presidency.

O`DONNELL: And Richard one of the differences of may not be difference but in the 1990 version of this with the Republicans in Washington, it was an extremely calculated play. They were doing this very particularly for calculated political advantage.

Their pollster Bob Teeter calculated how it would work for them. It`s not clear that this was such a real political calculation by Donald Trump. it might have been. But we never know whether it was just something that came off the top of his head or whether if there was any calculation behind him.

SMITH: I think it`s absolutely calculated. This is what this man does. he tries to set up debates about either you`re on the side of him and America or you`re on the side of black people, because you can`t see both, or brown people. And I just encourage my colleague who is on here with me, the next time he starts naming off quarterbacks he remembers Trevor Siemian out here in Denver.

O`DONNELL: And Jason, this reverence for the flag for Donald Trump apparently extends to the confederate flag that so many of his followers, we don`t know how many followers, but plenty of Donald Trump supporters wave the confederate flag sometimes more than the American flag.

JOHNSON: Yeah, at NASCAR, in Charlottesville and tons of different places. The degree to which somebody is offend by the flag is the degree to which you want to use it for motivations that the President happens to have. But here`s the other thing when you talk about these notions of respect, he doesn`t have credibility to talk about Respect. And no one in his administration, including you know his spokesperson Sanders and press Secretary, no one seems to want to talk about the core issue.

What are you and Jeff Sessions actually going to do about unarmed black people being murdered? That`s an issue. That`s an actual concern. Do something about that policy wise. But instead you would rather say this is about the flag. This is about ungrateful black people. All these things are missing.

And I think also what it exposes, and that is a larger issue that he doesn`t seem to realize on why he doesn`t realize so many angers are angry, it makes football unhappy for everybody. Nobody wants their entertainment to become a litmus test for where your politics are. People just want to watch the games. And he has ruined that for conservatives and liberals.

O`DONNELL: And Richard, we have been reporting recently about how the NFL was actually paid by the Federal Government to basically have these patriotic demonstrations at football games that they didn`t used to have. The teams used to be in the locker room when the anthem was played, come out afterwards. But they started paying them in the hope this might stimulate recruitment.

SMITH: Yeah, I don`t know what to say to that. If you`re going to join the military, raise your right hand over some guys that you saw on a football game. I don`t know. Good for you I guess. I don`t know anybody who joined for that reason.

O`DONNELL: So when you were in the army, you never heard anybody say well, it was watching those NFL players during the national anthem that made me want to do that?

SMITH: No, I never heard that. what I did hear people say is they wanted to defend freedom, such as the freedom of speech, the freedom to not have your President come after your job on live television with a private employer because you spoke up for something he doesn`t agree with. Not that specific example, of course. But that`s the sentimentthink that most of our troops and our veterans served for, right? I

We signed up to defend with our lives if necessary the very rights that Donald Trump and his administration are trampling on. And I would add to my colleague there, it`s not just the Trump isn`t talking about these things. His administration is actively doing things that make it harder for black people and brown people in America to stay alive, which we just saw in the speech from Jeff Sessions.

O`DONNELL: Coming up, the President continues to focus on footballs and knees and flags while the situation in Puerto Rico gets worse and the mayor of San Juan pleads for more help. We will be joined by the congressman – the congresswoman who took a knee today in the house

(COMMERCIAL BREAK)

(BEGIN VIDEO CLIP)

TRUMP: I`d like to take a moment to send America`s hearts and prayers to the people of Puerto Rico and the U.S. Virgin Islands. Everybody has said it`s amazing the job that we`ve done in Puerto Rico. We`re very proud of it. So I think we`ve done a really good job.

We`re continuing to. We are literally unloading on an hourly basis water, food, supplies and we are going to do far more than anybody else would be ever able to do.

(END VIDEO CLIP)

O`DONNELL: Of course that remains to be seen how much the Trump Administration is really going to do in Puerto Rico. When Democratic Congresswoman Sheila Jackson Lee of Texas was on the house floor last night speaking about the urgent need for a stronger government response to the desperate situation in Puerto Rico, she ended her remarks like this.

(BEGIN VIDEO CLIP)

SHEILA JACKSON LEE, U.S. CONGRESSWOMAN: I kneel in honor of them. I kneel in front of the flag and on this floor. I kneel in honor of the First Amendment. I kneel because the flag is a symbol for freedom.

I kneel because I`m going to stand against racism. I kneel because I will stand with those young men and I`ll stand with our soldiers and I`ll stand with America because I kneel.

(END VIDEO CLIP)

O`DONNELL: Congresswoman Sheila Jackson Lee joins us next.

(COMMERCIAL BREAK)

O`DONNELL: We`re joined now by Democratic Congresswoman Sheila Jackson Lee of Texas. Congresswoman, thank you very much for joining us tonight and, first of all, to talk about what you were talking about on the floor yesterday, the relief effort that`s need in Puerto Rico. What have you learned from Hurricane Harvey hitting your district in Houston that needs to be immediately applied to Puerto Rico?

LEE: Thank you, Lawrence and thank you for asking because that was the reason among others that I was on the floor. 185,000 homes are either destroyed or severely damaged in Houston. So we`re on a very, very strong or very, very long road to recovery. A lot of pain is still going on in Texas throughout my community. So I know that the real issue for Puerto Rico and we discussed that again today, is immediate, a quick aide, not legislative aide of 10 days from now. But we discussed an immediate appointing of a czar, sort of a military czar like General Honore was in Katrina.

We need immediate military aircraft ships come together port of Puerto Rico and we need the ability for planes, small planes and helicopters to be able to go into the areas where it`s difficult to get and to provide food and medicine. We need to make sure that people who do not have their medicine in places that are hard to reach get that access so they don`t – we can minimize the loss of life.

So it is a right now action. It`s a right now response, and I`m pretty taken aback by the words that I heard by the President that this will be the best response ever and we`re doing the best job ever. We can`t each see what is being done. That`s part of the crisis.

O`DONNELL: And congresswoman, the look into the mind of Donald Trump is always Twitter. Today he has five tweets about the NFL and two about Puerto Rico.

LEE: Baffling, because the outpouring of the members of Congress who are Puerto Rican dissent this morning in our closed door meeting made it very clear that this if we don`t act yesterday there may be massive loss of life because of disease and the loss of life because of the lack of med sand hospitals. And clearly the administration does not get it. I`d pray that we do not have another brownie moment because this is serious. It`s serious in the U.S. virgin islands, they too have a crisis.

I don`t think the President has even contended with the U.S. Virgin Islands. People are still suffering in Florida. We have 185,000 homes, as indicated to you and I`m getting calls every single day. People waiting in their destroyed homes or near their destroyed homes for FEMA inspectors are not enough to get there as quickly as possible so that people can begin to rebuild. So we`re all in a serious state of need and I would think that the President has a lot more do sitting at his desk to deal with the human needs of the people of the United States of America.

O`DONNELL: Congresswoman Sheila Jackson Lee, thank you very much for joining us tonight.

LEE: Thank you.

O`DONNELL: Up next, what Jimmy Kimmel has to say on his show tonight about the Republican Healthcare Bill.

(COMMERCIAL BREAK)

O`DONNELL: Here`s some of what Jimmy Kimmel had to say on his show tonight.

(BEGIN VIDEO CLIP)

JIMMY KIMMEL, TELEVISION HOST: President Trump, you made a deal with Chuck Schumer and Nancy Pelosi on the budget, you got great press for it. Do that again. Work with them.

You can call it Trump is awesome care, whatever. We`ll put your face on the masks in the operating room so people can see you and thank you just before they go under. This is not about sides. It`s about people who are sick and to all the Senators and Representatives who stopped this bill, thank you for being reasonable and know that we`re paying attention now and you`ll be hearing from us again.

(END VIDEO CLIP)

O`DONNELL: Once again Jimmy Kimmel gets the Last Word.

END

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